Fed chief makes debut on Hill

Lawmakers laud Bernanke for direct responses

Martin Crutsinger, The Associated Press

Published
10:00 pm PST, Wednesday, February 15, 2006

WASHINGTON -- New Federal Reserve Chairman Ben Bernanke said Wednesday that the economy is on track for good growth this year, sticking closely to predecessor Alan Greenspan's script with one big difference: His comments were much easier to understand.

In his debut congressional testimony as Fed chairman, Bernanke signaled that the central bank, which has raised interest rates 14 times since June 2004, stood ready to boost rates more if needed to combat inflation.

Investors and private economists, who had been apprehensive that Bernanke might sound a tougher line on inflation than Greenspan, said they detected no switch in policy from the Greenspan Fed.

"There were no big surprises. Bernanke kept very much to the promise he made at his confirmation hearing that he would maintain continuity with Greenspan," said David Jones, chief economist DMJ Advisors, a private forecasting firm in Denver.

Wall Street took Bernanke's testimony in stride with stocks ending the day up slightly. The Dow Jones industrial average rose 30.58 points to close at 11,058.97 after rising 136 points Tuesday.

Bernanke demonstrated during more than three hours before the House Financial Services Committee that he was up to the task of answering questions without upsetting financial markets.

Several committee members complimented Bernanke for his straightforward answers, a contrast to Greenspan, who mastered the art of using complex sentences to dodge questions he did not want to answer.

But although Bernanke was more direct, he skillfully avoided being led into areas where he did not want to state an opinion.

The only time Bernanke seemed uncomfortable was when he was asked for his reaction to speeches Greenspan has made, reportedly for large amounts of money, in Tokyo and New York.

"According to government ethics rules ... it is permissible for a retired (Fed) governor to speak in public about the economy so long as he or she does not divulge confidential information," Bernanke said. "I have no indication that he has violated that rule."

Private economists predicted the central bank will raise its target for the federal funds rate, the interest that banks charge each other, at Bernanke's first meeting March 27-28.